Self-employed retirement plans Nashville, TN. The independence of running your own company in Nashville, TN is one of the best aspects of being self-employed. That said, this independence often comes with certain challenges, particularly in terms of retirement savings, because you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider exploring their options. In addition to enjoying a more comfortable retirement, seeking advice from a financial advisor in Nashville, TN to establish your self-employed retirement plan offers significant tax advantages that allow both you and your business to thrive.
Few Nashville, TN financial advisory and retirement planning firms understand the needs of small business owners better than Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and Correct Capital are deeply experienced in helping businesses with their retirement planning needs. We understand that your business and retirement aspirations extend well past just monetary concerns, and we work tirelessly to offer tailored solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Nashville, TN, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Nashville, TN today.
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Why Nashville, TN Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also provide tangible benefits today. With customizable contribution options to substantial tax savings, partnering with a financial advisor in Nashville, TN allows you to customize your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) provides the flexibility to modify how much you save:
- Customizable Contributions: Contribute more during successful years and cut back when income is lower, ensuring your plan aligns with your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw your savings tax-free down the road—an advantageous choice if you expect your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, helping you keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to grow.
- State-Specific Incentives: Depending on where you live, you may be eligible for extra credits as a self-employed individual. These regional incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax credit of up to 50% of the first $2,000 they contribute a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across a mix of stocks, bonds, and other assets serves to reduce risk while still growing your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net prevents you from dipping into savings during tough times and incurring penalties.
Plan for the Future of Your Nashville, TN Business
Preparing for retirement enables you to plan ahead for what’s next with your Nashville, TN business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and don’t transfer with the business. These plans offer the financial stability you’ll need in the future. Keep in mind that while the sale of a business usually creates a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you’ll owe when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings provide the funds you need during the change. You may also seek advice from a financial advisor with expertise in succession and retirement planning to help with taxes during the sale.
With the right retirement plan, you gain control over your financial future, cut down your tax obligations, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Nashville, TN Now?
Time is one of the most valuable factors for building your retirement fund. Beginning sooner rather than later not only allows you to build a larger nest egg but also minimizes the pressure of saving aggressively in the future. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund could lead to a significant impact on the total you’ll have when you reach retirement age. The primary reason is compound interest—the financial principle where your investments grow, and those returns, subsequently, earn even more returns. The greater time span your money has to grow, the larger the effect of this compounding process.
Example: Alex and Taylor are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions made consistently can lead to substantial growth. Consider this example showing the power of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an projected return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Saving early, the less effort required each year to reach your retirement goals.
*The numbers shown in this scenario are estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is intended as illustrative examples and are not a promise of future results. Outcomes may change based on factors such as market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Nashville, TN, it is often the case that you prioritize reinvesting in your business over saving for retirement. However, beginning a plan now allows you to:
- Benefit from growth that is tax-deferred or tax-free withdrawals later on.
- Benefit from adjustable savings that change with your earnings.
- Create a long-term safety measure that ensures stability, no matter how your business develops.
The sooner you start, the less you’ll have to worry about playing catch-up later in life. Taking steps toward your retirement goals today means managing your financial future and allowing yourself the opportunity to focus on your objectives—both for your golden years and your Nashville, TN business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Nashville, TN, each offering its own benefits and trade-offs. A financial advisor can help you learn about the advantages and disadvantages of each plan and identify the one most suitable for your needs. In most cases, your self-employed retirement plan options in Nashville, TN include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that include specific tax advantages. In a conventional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are exempt from taxes. In both cases, withdrawals don’t incur penalties if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that permits those who are self-employed to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions more than the 25% you (the employer) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan is a good option for entrepreneurs facing fluctuating revenue streams. Compared to other retirement options, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs operate like traditional IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for companies that have no employees or where the only employee is a spouse. This type of plan function similarly to standard 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the increased savings potential often come with more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you have the ability to make two types of contributions:
- Employee contributions of up to 100% of your self-employment income, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that guarantees a pre-established payout to self-employed individuals upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but allows self-employed individuals to know what they'll get in retirement. This option is best suited for wealthier entrepreneurs who are focused on saving a large amount for retirement and are prepared to contribute larger deposits. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income during retirement.
Eligibility: Self-employed professionals managing a one-person company or with a small staff of under five may establish an individual defined benefit plan, but it's generally recommended for those over 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans are:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% and are willing to do more
- Organizations showing consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit must be determined by an actuary determined by your financial situation, age, and savings targets. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Nashville, TN for Your Self-Employed Retirement Plan
Working with a financial advisor in Nashville, TN experienced with retirement plans for the self-employed serves as an essential partner for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and craft a tailored strategy that matches your objectives. A financial advisor in Nashville, TN will evaluate your financial situation, identify your risk preferences, and assist you in selecting the best options about saving and investing for retirement. A key part of what we do for you involves:
- Assist in selecting a plan that best fits your needs and goals
- Customize the plan to your needs even further
- Create a written plan in accordance with IRS guidelines
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance throughout your retirement planning process
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Nashville, TN: Correct Capital's Process
Nashville, TN business owners who aren’t equipped with the time or understanding to handle their retirement savings strategy on their own can become overwhelmed when faced with their options. Through our team at Correct Capital, our Nashville, TN financial advisors take on the lion's share of your savings plan setup for you, and strive to ensure meeting your retirement goals as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in just four steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This brief introduction helps us get a sense of your goals with zero commitment or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll request information, including whether you have employees, your present financial standing, and your retirement goals. This enables us to craft a tailored approach suited specifically for your needs.
- Review Your Plan: After we put together a plan using the information you provide, we'll schedule a meeting and go over your plan step by step to make sure it's clear and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can initiate your savings journey. Throughout our relationship, we'll have regular meetings and track your progress to keep it tailored to your evolving circumstances.
Our Nashville, TN financial advisors and retirement plan consultants are fiduciary advisors, meaning they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Nashville, TN include:
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
- Fiduciary Financial Advisor
Call Correct Capital for Your Self-Employed Retirement Plan in Nashville, TN
To you, your business is more than "just a business", and your Nashville, TN financial advisors need to offer more than simply sound financial advice. With Correct Capital, we focus on building a relationship with our clients and their businesses to deliver tailored self-employed retirement plans. All our clients in Nashville, TN benefit from our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
